Customers to REALTORS: Open Houses Suck
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• Posted by Matthew Ferrara on December 17, 2009 |
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According to research by the National Association of REALTORS, buyers habits are changing when it comes to real estate. The report, recently released by NAR, asked more than 100,000 consumers to rank the usefulness of information sources to their efforts to learn more about the marketplace. The good news was that for the first time in years, the real estate agent edged-out the internet for top-spot as “very useful” (81% vs 77%). The bad news is that, by a factor of 4, most buyers think open houses suck.
Within the margin of error, the agent-vs-internet top-spot is essentially a tie. That’s good, because the agent-as-most-useful had been on a steady decline for the last decade. Landing on-par with the internet is mostly good news, depending upon how you interpret it. On one hand, it could mean that today’s agents are providing excellent information and service when buyers contact them. On the other hand, it could mean that REALTORS have been putting steadily worse information online, to the point that the consumer feels their online listing content is so poor, they might as well just contact the agent (and get it over with).
That would be unfortunate.
If we compare the data year-over-year, some of the results seem ponderously unchanged. For example, the 2008 survey indicated that 46% of buyers felt yard signs were “very useful” compared to 42% in the 2009 survey: considering the data margin, it seems strange that usefulness of yard signs in the era of foreclosures-on-every-corner remained about the same. Not to mention most yard signs today still don’t feature text-message options to attract and inform Gen Y buyers.
Makes you wonder.
Then there’s the surge in usefulness in two categories that is noteworthy: Billboards went from near-bottom 9th rank to 4th ranked usefulness this year. So did television, which was in the last spot in 2008, but earned the middle spot this year. Most observers would think we’d think these rises as unbelievable, since neither seems like a growing medium to reach modern consumers. But their rise is mostly due to steep falls in other categories:
- Home book magazines dropped from 27% “very useful” to 90% “not useful.”
- Newspaper ads went from 29% very useful to 98% “somewhat to not useful.”
Now if only REALTORS would show their sellers this data, they might get on with actually selling more homes and raising margins in 2010. But don’t bet on it.
The research number that worries me the most – and brings into question how agents took top-spot this year – is the data regarding the usefulness of open houses. In the 2007-2008 time period, buyers ranked open houses as “very useful” 40% of the time; They said 92% of the time they were “very to somewhat” useful. But in the last 12 month study, buyers only ranked open houses very useful 10% of the time. barely 35% of the time did buyers feel that open houses were “very to somewhat useful.”
So, basically, buyers think open houses suck.
The real estate industry should be shocked and worried. Alas, more REALTORS seem focused on how much free money it can get from Uncle Sam, to fund FHA loans, so more people can put even less of their own money down on homes they’ll be defaulting on at a soaring rate in the future. Once again, something’s rotting on the inside, while all eyes are focused elsewhere. Let’s hope nobody tells their clients – the sellers.
Why might it be that buyers find open houses so useless? The data doesn’t say, but I have a few suspicions:
- REALTORS themselves consistently badmouth open houses. Perhaps they have created a self-fulfilling situation from their own attitudes. Ask any agent what they think about open houses and you’ll find no lack of complaints. Neighbors are nosy (thus, routinely ignored). Agents have convinced themselves that consumers don’t want to be “sold,” justification for standing around saying little to nothing. And rarely do you hear the words “Would you like to make an offer?” from the mouth of the agent (nor their surrogate assistant) at these sales-less selling events.
- If they aren’t soundly ignored, then most buyers are intimidated by the open house experience. Too many agents have been taught the “Gunslinger” theory of objection handling. “Go ahead, punk. Make my day!” so they can “overcome the objection” like a quick-draw contest. Gen Y is completely freaked out by this environment, because when they grew up, everyone got a trophy! They can’t possibly out-draw Top Agent Betty Barracuda, so they rapidly walk through keeping their opinions to themselves. Even Gen X sees no reason to engage in a shootout with someone who won’t really answer their questions unless they register or sign a representation contract. There are plenty of other houses to see without the hassle, like the For Sale by Owner (ie., Bank) down the street.
- Open houses are still done on Saturdays and Sundays – because that’s when most Baby Boomer agents have free time. But Sundays aren’t free time for the typical buyer, made up of Gen X and Gen Y’ers. Their weekends are busy with personal life, kids, or simply sleeping after a 60-hour work week. Visiting houses isn’t a priority. So maybe open houses are useless because they are held on the wrong days at the wrong time. For the consumer, that is.
- Managers have no idea any of this is happening, because the last time a manager went to an open house to coach their agents was probably….. um….never. The sales event has been essentially unsupervised for years – and remains unimproved, or worse, degraded. This year’s consumer data proves it. Without proper management or coaching, agents struggling with the few modern consumers who do stop by won’t spontaneously improve their outcomes all by themselves.
It begs the question as to whether consumers would prefer visiting a car showroom to a Sunday open house.
Either real estate is a sales business, or it’s not. Either the sales event has to be convenient and conducive to the buyer’s preferences, or they won’t show up. Either the agent is going to be useful, or they will not. When four out of the top five “very useful” sources of information this year were not a human being, the industry should stop and ask why. As for the fifth most useful place buyers used to find a home – open houses – it actually had a human being present. But in less than 12 months, consumers ranked it four-times lower in usefulness than the year before.
In the mind of consumers, open houses suck. Not even a recession can account for this.
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Great piece, Matt. Allan Dalton recently said that we are focused almost 100% on technology at trade-shows and Realtor events and almost nowhere will you find information about selling. He said we are not “Real Estate Technologists”, but we are “Real Estate Salespersons”!
Open houses suck! In my local marketplace only a handful of open houses occur every weekend and I stop in them since I’m our ‘Director of Career Development’ to see what’s happening. This scene is bad. No detailed facts sheets, laptops, music, food, etc. I recently found an agent sleeping on a stool in an open house that was about 50 degrees cold. Real welcoming!
I think privately, although sometimes and often publicly in my marketplace, real estate agents (both younger and older) hope for things like “The Do-Not Call List” (so they don’t have to make phone calls, because they aren’t good at it; so that will level the playing field with competitors who are good on the phone), “The End of Open Houses” (because they think open houses are all about registering people and getting another e-mail address to auto-spam them listings) and “The End of Follow-Up” (because they’ll just call me, after all I don’t want to bother them during Monday Night Football; I’ll just send a non-intrusive e-mail instead!).
Dan Iampieri
Director of Career Development
Weichert, Realtors – Caton Properties
Ellicott City, MD
DanTheHouseMan@ymail.com
Facebook.com/DanTheHouseMan
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Matthew Ferrara Reply:
December 18th, 2009 at 12:54 PM
Dan: I absolutely love your reply! You are RIGHT ON! We’re launching live TV broadcasts next month – maybe you’d consider being one of our early guests on this very topic! Happy Holidays!
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I’d be honored to be a guest. Video is my niche. YouTube.com/diampieri
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Interesting take on the matter. I agree with all of your reasons why there is a problem, but I think open houses are more useful than people think, our organization takes a consistent, measured approach to open houses and we engage lots of buyers that way, but I think our success comes form doing exactly what you said, giving them what they want.
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Matt. In general Open Houses are probably not the best way to connect with a ready, willing and able buyer but it is one spot that good, customer-focused agents can get out and meet people. Med students and interns get to practice their techniques and skills on cadavers. realtors aren’t luck enough to have dead bodies to practice on (unless you count some of the people in the back corners of the office, drinking coffee and asking “where do we keep the old MLS Comp books?”).
I’ll agree that the Realtor who can deliver valuable services to the walk in customer and relevant feedback to the Seller is the exception, not the rule. Realtors need to decide what their purpose is for hosting an Open House. If it’s to meet some people, engage in healthy dialogue about the market and perhaps create some sustainable relationships, then it could be time well spent. If it’s to grab two hours of “down time” with the new John Grisham novel, perhaps they should consider a local Panera or Starbucks and save the industry some image points.
I won’t cease to suggest Open Houses as a vehicle for agents to generate leads. They’re just another flavor in the “Baskin Robins” trough of prospecting activities. I’ll just hopefully prepare those who do elect to spend some of their valuable time hosting one to make it as effective as possible and be prepared to provide the visitors with any and all of the information they may be seeking – that day or in the future.
Keep up the thought provoking posts.
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Open houses do suck when agents don’t have a clearly defined purpose, strategy, or tactics for conducting them. These are the “museum curators” of our real estate world – the struggling, underperforming, mass of agents whose careers (and lives) lack the one key element to success -Consciousness.
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Matthew Ferrara Reply:
December 21st, 2009 at 2:14 PM
Oh… you mean houses don’t “sell themselves”? I have to be present – AND aware, interactive, and SELL? They never told me that in pre-license school…
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Matt, Great information – thanks!
I think buyers (and many agents) don’t realize the importance of being in a house vs. looking at photos on the Internet, which as we know can be very deceptive – galley kitchens look like full-size rooms, only the good parts of the house are photographed, I always fix the color… Houses live and breath, and have a feel to them that even the best videos can’t capture. And, there’s the location – again, somehow it’s always different than what we see on Google maps. People are doing themselves are big disservice by not being completely educated about the market.
It’s also true though that people are busy; especially those who can afford to buy houses – not just on weekends, but they work late, are picking up they’re kids, etc., in some place “commuter” open houses work in good weather, but again not real practical with soccer games,etc. going. I’m not making excuses, just understand the realities of busy buyer lifestyles.
Finally, some buyers are educated enough to know they want their own agent and know it’s not in their best interest to be chatting with the listing agent who represents the seller. Sure, there are lazy agents, pushy agents, agents no one really wants to hear from, new and or part-time agents who know less than the buyers – all part of it.
While open houses can be a productive way for some buyers to educate themselves and for some agents it’s a great source of business, my experience has been that qualified buyers don’t wait for open houses; they call an agent – hopefully one who bothers to preview new listings, and they find they get what they need in an efficient and cost effective way.
As for selling houses, houses that have open houses don’t sell any quicker than those who don’t. As for agents, aren’t we supposed to be bringing qualified buyers? Or is that except when we put signs all over the streets to advertise ourselves (our companies)…
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Matt, I think you’ll find that consumers don’t need to spend anywhere near as much time going through Open Homes because they can see so much about a home over the internet. (Marilyn you’re right that they do need to inspect the home to appreciate it, but try telling that to a buyer searching for property via the convenience of the internet).
It’s only once you get them on the phone that you’ll really get the chance to express the importance of the physical inspection with any real vigour.
You’ll also find that after having seen a property on the internet a lot of buyers walk through homes as if they are doing a 2nd inspection when they physically go through the homes because they know so much about the property already.
Some agents will make the mistake of deliberately trying to combat this by providing less information online but that will have a worse effect because lots of buyers are now refining their inspections down to only a few homes that they want to inspect, rather than spending weekend after weekend trudging through open homes or properties that don’t suit them.
Once they have decided on a home they want to inspect most buyers won’t want to wait for the open home either, in fear of missing out on the property. They want to see it as soon as they can & good agents will need to be able to respond quickly & make it as easy as possible for the buyer to buy.
Due to the changes in technology, strategies around the Open Homes definitely need to be revised & the sit, wait & pray for an inspection approach isn’t the way to do it.
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Great information and very accurate for the most part. An open house is an opportunity. It’s an opportunity to gather prospects. The buyer is there; all the agent has to do is cultivate him/her. It is up to the agent to make the most of the situation. An open house id never a waste of time if the time is used productively.
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I have worked in real estate for almost 30 years and think Open Houses are a great way to get new clients but most agents do not want the work required to hold an open house, if done correctly.
First, too many agents are all about getting listings and not enough about selling the listings they have. The more successful agents know that it takes far less work to be a listing agent than it does to be a buyer’s agent yet forget that escrows have both a buyer and seller. It is very easy to double-end a listing through an Open House, conditionally.
Doing an Open House correctly take a little work and agents for the most part are not willing to go out and do what it takes. Getting up and putting your sign out on a Sunday morning and handing out MLS information flyers is not the way to do an Open House if you want to sell the house or get warm leads, which is the name of the game.
Done correctly, the agent must educate the sellers so that the house is ready to show. That means the house is clean and Staged®, but long before that the agent and seller need to get equipped to do the event. Getting equipped may require the services from other people in the industry such a professional Stager from StagedHomes.com, a painter, lawn service etc. Step 2 includes the agent having some type of flyer about the house that includes the relevant information about the house, the dates, times and something about them as real estate professional. Now, having something in his or her hand, the agent should go to step three and that is letting the neighbors know about the Open House. Chances are great that one of the neighbors will be selling in the next few months so it creates the first chance for a warm lead.
Too often agents just stick signs in people’s yards never asking for permission and missing a great opportunity to make contact with yet another homeowner a few blocks away. Although permission may not be legally required in the neighborhood, it misses another excellent opportunity for an agent to look professional and get another next warm lead. Asking for permission should be done days before for many reasons least of which is that the agent now has time to advertise themselves as a true real estate professional. Why would they not believe that they are a professional when they have already proved they care more about that homeowner’s property rights? With that said, agents should consider the speed limit of the road being traveled because putting a sign up on the corner five feet before the corner when the driver is doing 60 does not get the buyer to the Open House.
Once at the open house the finishing touches need to be done or at least checked by the agent. The agent needs to check and make sure that the bathroom trashcans are empty, that the toilet lids are closed, that every single light in the house is turned on and that all the window coverings are open. Something that may be overlooked with very negative results is dog poop in the yard. It must be picked up out of the grass (front and back yards both need to be inspected) and the cat box can be a real turn off so clean it if needed.
I always preferred having some type of booklet on the house showing information such as the average utility bills for that house, information on the local schools in the area, possibly the city crime stats, distance to the local shopping centers, etc. This booklet’s intended purpose is not for a perspective buyer to take but something for the agent to use to hold a second (or third) perspective buyer inside the house should the agent be busy. This also helps set the agent apart from the other agents in the area giving yet another warm lead. Buyers see that agent as going above the call of duty and will often call that agent when they are ready to buy.
Just putting a listing or Open House in the MLS and a sign in the ground is not the correct way to market the house or work an open house yet it is common practice. Need you ask why agents and homeowners dislike them and why buyers do not respond?
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I enjoy open houses, meeting new people and answering all of their questions. I think this is one of the best opportunities we as Realtor’s have as long as you host them correctly.
They should be made warm and inviting. Spending a little time doing this will have a big pay off.
Buyers are more apt to sign in with complete and legible contact info.
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While there are many good points on this topic, in my office we also look statistically at what kind of buyer environment and competition is out there that relies on us having open houses. To wit, we have one listing in an area that is heavily influenced by an multi-Asian demographic community. In this area it is open houses that have brought the most showing activity to the listing.
From a competition standpoint, we also know that some of the rebate driven agencies charge or somewhat discourage their clientele to use them for going out to see listings, thus keeping their costs down so they can afford to rebate commissions. In these cases, because we know the users of their service tend to be the right financial demographic for some of our listings, we make sure to do some open houses so that the buyer clients can come see the house for themselves. We’re more than happy to answer some of the basic questions they’ll have but we make sure to be very clear about our agency relationship to the seller(s) and direct them back to their agency of choice when it comes to issues that may cross the line.
Also, we mix up some of our open houses to sort out if weekends, twilight or other times are best to give access to a home. Plus, for some sellers it’s great to do a few open houses to build traffic into the home especially if they have pets or small children where they can focus on fewer interruptions and to provide the best showing opportunity of their home.
There are many reasons for and against open houses, but it all boils down to the property, client and focus of the event itself. You have to truly define why it is that you’re there and what the desired outcome will be and then measure to see if you can achieve it.
Cheers,
Rebecca “Reba” Haas
Team Reba of RE/MAX Metro Realty
Seattle, WA
425-970-3697 office
http://www.TeamReba.com
http://www.TeamReba.com/blog
@teamreba on Twitter
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I think that it is time for the open house to go the way of the dinosaur! No longer effective just like newspaper advertising and the like. The market changes & we should change with it or become ‘extinct’. I think it might be harder for agents that are not optimally using the internet to get buyers or sell their listings. The old ways just feel more comfortable, that’s what a brontosaurus said just before he went extinct!
All the survey prove it, year after year and still it continues.
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Matthew Ferrara Reply:
January 4th, 2010 at 10:09 AM
Lyn: That’s a possibility – but I’m not entirely so sure we should throw open houses out. I think we need to start DOING them better. Real estate is a sales business; and any opportunity we get to be in front of people is critical. I think one of the reasons they are perceived as so useless is that we aren’t doing them as well as we can. Not that consumer’s don’t want them – but that they don’t want them the way we’re doing them today… Thanks for your comments!!
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Lyn, I once sold six sides in one single day from doing one open house something I have never done from a computer including the MLS.
Make no mistake, I do believe in computers and technology and I believe that I am as much up on computers as any agent in real estate, I even got my first cell phone and computer for my real estate business in 1984. I believe in computers and technology so much that I got my son a computer when he turned two and the return on investment was great, he is now a software engineer for Microsoft.
I do believe however that many studies and surveys support the position that personal contact is vital, especially in a people business like real estate.
I have been in real estate for many, many years and still believe that some of the old ways are the best ways, in my opinion. Case in point, Century 21 had the ugliest jackets in the world but everyone knew what you did for a living, if you had one on. When they went to the new color, a lot of business went by the way side and their market share is no longer what it once was.
You appear that you trying to stay state of the art or following the industry changes so let me ask you are you having an accredited stage your listings. Surveys say…”They sell 5 times faster on a national average” Staged homes show better and sell faster because people can see what the house has to offer and more inclined to visit them and buy them.
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While I couldn’t agree more that this is a people business, the one thing I seems to be lost in this whole thing is the SELLER. Is an open house simply for us to find new buyers who, in most cases, aren’t buying the house you are holding open OR is it to sell the house? While I do believe a good open house is valuable at times, I also believe (and have experienced first hand) that I will be able to actually sell the house just as quickly by simply helping the seller price their home competively while using the internet, phone and other word of mouth methods to spread the word. Again, a good open (home is priced well, in a good location and info spread prior to holding open) is a great way to expose your listing and possibly meet new people. They should not simply disappear – I just can’t understand why we are so eager to put our interests above that of our client by kicking them out for 3 hours every weekend while we open their door to the strangers of the world…enticing them inside with cookies!
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Dan, are you serious? Do you realtors really sit an an open house for 3 hours at a time?
If so, under normal circumstances realtors will probably find that most people will either be really keen & turn up early, waiting for the agent to turn up or they’ll arrive at the very end of the open home time. Which means in most cases the realtor is wasting about 2 to 21/2 hours babysitting the house.
With people seeing so much on the internet now. Previously, the maximum time I’d ever dedicate to an open home was 45 minutes, but now that everybody is a lot more time poor I believe that a 30 minute open home will create a buzz around a home with the early birds & the late-comers all turning up around the same time & increase the chance of success.
Plus, it’s more efficient for the agent & allows them to open more homes on the same day & will keep the agent’s energy levels high, rather than falling asleep or twiddling their thumbs whilst sitting at a house for 3 hours.
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Interesting. I used to like to do open houses but now there are hardly any people coming to open houses. In the past I have had a couple of my houses sell because of it. The buyers had their own realtor and for some reason the home didn’t show up in their search or the listings that the agent gave them. I have also picked up sellers and buyers from open houses and sold them something else but not the home that I was doing the open house for.
How would you consider doing an open house? Would you advertise? Where? I would be interested in someone who has been successful getting a larger group of buyers through in today’s market.
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Matthew Ferrara Reply:
January 24th, 2010 at 8:33 PM
Hi Lynn: Let me offer a few quick ideas: Try open houses on days and times that work for the potential BUYERS. So, if your listing’s potential buyer profile is GEN X or GEN Y consumer, we’re talking during the week, not weekend, and perhaps 5-8pm, not early afternoons. You can get the word out by posting the open house times on the listing data on your website, in your sphere of influence on social networks and directly to buyers’ cell phones from the numbers you have accumulated by prospecting to buyers. That’s just a start, but hope it offers a new direction….
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Matt:
There is a lot of interesting information in this piece. Regarding open houses, in spite of what this survey showed, I think they still have an important role to play. But, I also think whether or not one will be effective should be tailored to the specific property. Some homes are better candidates for open houses than others. It depends on the area and also the home itself.
I would always try an open house with a new listing and see how it fairs. Buyers still need to get into a property to see it and the open house format is a good way for them to do that. Your observation of Gen X and Gen Y is a good one and they may, indeed, need an alternative to a Sunday afternoon.
An open house is still a valid way to introduce a property to the public.
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Open Houses are a thing of the past. I do feel they can be effective if the agent holding it Open is prepared to inform, explain, and sell themself or the house. I feel that most people coming through are just nosy neighbers or your client’s friend & family. Most pre-qualified buyers that are motivated to buy and buy soon have an agent helping them with the process. I have SOLD 2 of my listing’s through Open Houses and it was nice to be the dual agent and not have anyone else cause delays in the negotiaing and closing, however this is not very common. Some agents only do Open Houses in the hope of picking up a buyer.
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Matthew Ferrara Reply:
February 4th, 2010 at 9:43 PM
Michelle – sorry to hear you think open houses are a thing of the past. CONSUMERS tell us they are the third most common place they find their listing agent. And buyers don’t like them so much – MOSTLY because we hold them on the wrong days (Sunday) rather than more convenient times. I’m not convinced Open Houses don’t work; I guess it just depends upon what you’re trying to have “happen” by holding them…… Thanks for your comments and stopping by! We appreciate your feedback…
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I’d rather have a root canal than hold a house open, and I’m just as likely to make a sale at the periodontist’s office during said procedure as I am at an open house. If an agent says they’re averaging nearly a sale per open house, I’m sorry I don’t believe that. Less than 1% of open houses result in a sale is what I’m guessing. No offense anyone, I’m just sayin’….:)
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Matthew Ferrara Reply:
February 4th, 2010 at 9:45 PM
I don’t know who said they were averaging a sale per open house, but I actually would believe it if the person was engaged, talked to customers and used solid sales skills. That’s what’s SUPPOSED to happen, right, when you sell? Anyway, just a reminder that one of the biggest points about open houses is that it’s not necessarily about getting BUYERS but also getting SELLERS: Research puts the Open House as the third most common place sellers find their agents… so maybe that puts a whole new spin and reason for doing them….? just a thought…
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Great article! Where are those survey results you quote? I searched realtor.org without any success.
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Matthew Ferrara Reply:
February 6th, 2010 at 9:29 AM
Scott: Thanks for your comments. The link on REALTOR.ORG is http://www.realtor.org/prodser.nsf/products/186-45-09?OpenDocument or do a search at the Store http://www.realtor.org/prodser.nsf/StoreHome/REALTORStore for “Profile of Home Buyers and Sellers” but be sure to get the FREE DOWNLOAD as a member of NAR. Don’t pay for the printed version :>
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Hi, my broker says that if you have one person or no people showing up to the open house, it doesn’t matter. The success comes when we are out there talking to people to invite them to the open house, i.e. the ‘noisy neighbor’, FSBO, etc.He teaches us to be proactive in inviting people there—from the print ad, to onine ad promoting open house, invitations to FSBOs, expireds in the neigborhood, immediate neighbors surrounding the listing. I hand out a ‘digital business card’, a mini-cd with a virtual tour, with my selling and buying guide. Because of my proactive prospecting to get people there, it is successful. I also have a no-pressure approach during the open house and don’t ask for their contact information until they agree to having me send them something-more listings via email, buyers seminar invitation, etc. It is unfortunate other Realtors are not doing it right for the consumer’s perception to by ‘not useful’. I am writing a contract tomorrow for a buyer generated through an open house, and have two closing this month from an open house.
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Matthew Ferrara Reply:
February 7th, 2010 at 10:08 AM
Hi Dawn: Right on! Now that’s what I call selling real estate. Funny how so many REALTORS say “nobody shows up” at their open houses, but they really don’t TELL anyone about it (a useless newspaper ad isn’t enough). They should be INVITING and PROSPECTING like you are. Any chance you get to interact with people – in person especially – like an Open House should never be wasted. And it sound like you’re proving my point with your closings and contracts for this month. Keep up the good work!
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